Local Property Tax Variations – 2017

14 Oct 2016

Key Point

Six local authorities that had applied a reduced rate of Local Property Tax (LPT) in 2016 have voted to apply the basic rate for 2017. A further three Councils voted to apply a rate above the basic rate in 2017. These adjustments will increase their total LPT revenue by €10 million.

Context

The 31 local authorities had until 30 September, 2016 to inform the Revenue if they had voted to adjust the basic rate of LPT for 2017. Councillors can adjust the basic rate of LPT by +/- 15%, and this is termed the ‘local adjustment factor’.

For 2016, 20 Councils applied the basic rate, while 11 Councils applied a local adjustment factor ranging from -1.5% in Louth, -7.5% in Kildare, to -15% in South Dublin. Approximately €453m in LPT is due to be collected in 2016. For 2017, 23 Councils will apply the basic rate of LPT, five will have a reduced rate and three will apply a rate above the basic rate. The value of the reduction by the five Councils is €30.2 million.

LPT Variations 2017

In 2017, €527m was estimated to be collected pre-variation. Five local authorities chose to decrease their LPT rate for 2017 below the basic rate; Dublin City, Dún Laoghaire Rathdown, Fingal, South Dublin (all -15%), and Longford (-3%). Table 1 shows the increase/ decrease in LPT revenue for 2017 based on the local adjustment factor voted on by local authorities (Councils where it varies to 2016).

Table 1

The impact of local adjustment factor decisions on LPT revenue in 2017 is a cumulative reduction of €20 million. The equivalent in 2016 was circa €25 million.

Cork City Council applied a 10% reduction to the LPT rate in 2015 and 2016. It will apply the basic rate in 2017. The 2017 draft budget for Cork City estimates a 1.3% growth in expenditure. Payroll expenses are expected to increase by 2.5% or €1.95m in line with public service agreements. The Council included €405,000 from its Revenue reserves in adopting the 2016 Budget and €505,000 has been factored in for 2017. Taking €505,000 from the Revenue reserve would have depleted it by the end of 2017.

The Three Outliers

Three local authorities voted to increase the LPT above the basic rate. This is the first time that Councils have voted to apply a higher rate of LPT relative to the basic rate. These Councils are Galway County Council (+10%), Limerick City & County Council (+10%), and Wexford County Council (+5%). The impact of their decision is shown in the table below.

Table 2

Galway County has an estimated budget shortfall of €2.5m for 2017, and increasing financial pressure owing to the need for increased provision for vacant and uncollectable rates. During the month long consultation period held by the three councils on the LPT for 2017 no submissions from the public were received. Galway County Council will gain €1.5m from its decision to increase the LPT by 10%. Limerick City & County Council will gain €1.6m, while Wexford County Council will gain €0.608m.